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Lexion, a platform leveraging AI to streamline legal contract workloads, today announced that it closed an $11 million series A funding round led by Khosla Ventures with participation from Madrona Venture Group and Wilson Sonsini. The capital brings the company’s total raised to $15.2 million to date, and cofounder and CEO Gaurav Oberoi says that it’ll be used to support the development of a workflow module designed to help legal teams manage contract intake, negotiations, approvals, and signatures.
According to Gartner, legal departments will increase their technology spend 300% by 2025, and yet will only realize 30% of the benefit of their contract lifecycle management (CLM) software because of complexities with requirements gathering, change management, and user adoption. Many CLMs require extensive time and resources to drive value. According to a Clio survey, when they use CLMs, lawyers spend only 2.3 hours a day on billable tasks and collect an average of only 1.6 hours of their billable time.
Incubated at the Allen Institute for AI in 2019, Lexion offers an NLP system that turns contract text into structured data and delivers it in a repository with search, reporting, alerts, permissions, and integrations. Beyond this, the startup provides a range of legal support services that aim to help firms increase efficiencies and recognize more revenue.
Lexion’s three founders — Oberoi, Emad Elwany, and James Baird — met at the Allen Institute for AI, where they were exploring ways to commercialize AI research, specifically NLP. Oberoi built several software-as-a-service businesses, most recently at SurveyMonkey, while Elwany helped to build NLP products at Microsoft, including the company’s AI-powered calendar scheduler and conversational AI platform.
“In-house counsel are skilled individuals who want to work on high value tasks for their business. Yet, as much as 50% of their week can be spent doing relatively low value tasks like fetching contracts for teammates, answering trivial contract questions repeatedly, and spending weeks reading through contracts to create reports for the business,” Oberoi told VentureBeat in an email Q&A. “Lexion eliminates these low-value tasks by turning contracts into structured information, unlocking huge timesaving value for entire businesses.”
Lexion’s platform centralizes contracts in one place, essentially converting them from Word-like documents into databases with columns like “parties,” “effective date,” and “payment terms.” A search box and connectors for Slack, Microsoft Teams, Salesforce, Coupa, and other enterprise systems make contracts easier to find, while reporting tools let users answers questions like “What vendor or customer contracts will expire or renew next month?” and “Which customers have limits on fee increases?” without having to read through thousands of pages.
Lexion claims to have trained over 125 different machine learning models to extract key insights, terms, and clauses from commercial contracts such as orders, mergers and acquisitions, statements-of-work, contractor agreements, employment contracts, and venture financing documents. Its system can recognize when a single PDF contains several contracts glued together, like a master agreement followed by an order form. And it can track dates of contracts and deliver reminders of upcoming events like auto-renewal cancellation, notice deadlines, and expiration dates.
“We’ve invested heavily, not just into NLP to understand prose, but also into understanding tabular structures, handwriting, and fixing optical character recognition issues,” Oberoi said.
In Q3, Lexion — which competes with Cortical, Pactum, LinkSquares, Evisort, Contractbook, and Agiloft — plans to release the aforementioned workflow module, which Oberoi says was designed based on feedback from over 50 general counsel, attorneys, and contract managers across a range of businesses. It’ll provide a dashboard to manage intake and tasks while letting the rest of the company email in requests, redlines, and follow-up questions.
“The consistent themes we heard were that other CLMs failed because they required far too much planning and requirements gathering up front, then they had to be configured based on those requirements that took substantial time and consulting fees, and then a huge change management and training process was needed to roll it out — and all this, only if there was broad executive buy-in to make it happen,” Oberoi said. “It’s surprising that in 2021 most departments in companies have standard allocations in the budget to buy software-as-a-service products, but legal does not.”
In the past 6 months, Seattle, Washington-based Lexion says it’s seen rapid growth, increasing revenues 400% and bringing on major brands like OfferUp, Blue Nile, and Outreach. The platform now has tens of thousands of users across segments including software, consumer packaged goods, and biotech and expects to triple revenue over the next year as it expands its workforce from 31 employees to more than 60.
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